NEW YORK (TheStreet) -- Activist hedge fund Sarissa Capital is starting a proxy fight to force the ouster of Ariad Pharmaceuticals (ARIA) founder and CEO Harvey Berger.

Sarissa, led by former Carl Icahn lieutenant Alex Denner, is Ariad's largest shareholder, with a 6.9% stake in the biotech company. On Thursday, Sarissa informed Ariad that it is nominating two directors for election to the company's board with the intent to replace Berger and another incumbent director, Wayne Wilson, both of whom are up for re-election.

In a regulatory notice filed with the Securities and Exchange Commission on Friday, Sarissa said it is mounting a proxy battle because negotiations with Ariad's current board to "facilitate the imminent retirement" of Berger broke down.

Sarissa first bought a sizable stake in Ariad in 2013 after safety problems with the company's cancer drug Iclusig caused the stock to plummet. Denner joined Ariad's board in February 2014 and worked behind the scenes to change the make-up of the company's board and replace Berger as CEO. Last September, Ariad's board blocked Denner from acquiring a larger stake in the company. Denner and Ariad's board have also been unable to agree on the nomination of another independent director.

CNBC first reported on Sarissa's plans to mount a proxy battle and force the ouster of Ariad's CEO last week.

Sarissa has nominated Richard Mulligan and Anna Protopapas to stand for election to Ariad's board at the company's 2015 shareholder meeting. If elected, they would replace Berger and Wilson.

Ariad shares closed Thursday at $7.27. The stock has lost 15% of its value in the past year and is down 65% in the past two years, hurt by declining sales of leukemia treatment Iclusig, and uncertainties surrounding the future strategic direction of the company. 

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.